In the coordination failure, the most likely explanation of business cycles are
A) money supply shocks.
B) government spending shocks.
C) total factor productivity shocks.
D) fluctuations between 'good' and 'bad' equilibria.
E) labour market shocks.

Question

Quizplus · Accepted Answer

Coordination failure refers to situations in which there are multiple equilibria in the economy, with each equilibrium having its own level of output and employment. Fluctuations between 'good' and 'bad' equilibria best explain business cycles resulting from coordination failure.

In the Coordination Failure, the Most Likely Explanation of Business